Introducing Vanguard U.S. High-Yield Corporate Bond Index ETF (VCHY)

Key takeaways:

• Low-cost below-investment-grade credit. VCHY provides broadly diversified exposure to the broad high-yield universe. Its estimated expense ratio is 0.05%¹— below the index high-yield mutual fund and ETF category average of ­0.24% and the active high-yield mutual fund and ETF category average of 0.50%.²
• Enhanced income potential. VCHY tracks a benchmark that has outperformed the US Agg* by about 450 bps annually on average over the last 10 years.³ It can help clients seeking equity-like returns with lower volatility.⁴
• Systematic indexing. VCHY leverages Vanguard’s scale, human oversight, and advanced technology to manage this index ETF through precision benchmark sampling.

On June 4, 2026, Vanguard U.S. High-Yield Corporate Bond Index ETF (VCHY) joined Vanguard’s expanding fixed income ETF lineup as a low-cost way for clients who aspire to seek more potential income and total return through index exposure to the broad high-yield fixed income universe.

VCHY’s estimated expense ratio of 0.05%¹ is among the lowest of its index high-yield category of mutual funds and ETFs.² The ETF tracks a benchmark index (Bloomberg U.S. High Yield 250MM 2% Issuer Capped Index Ticker: I40477US) that has outperformed the Bloomberg U.S. Aggregate Bond Index by roughly 4.5% annually on average over the last 10 years.³

Help keep more of your returns

VCHY’s 0.05%¹ expense ratio is well below the index high-yield mutual fund and ETF category average of 0.24% and the active mutual fund and ETF high-yield category average of 0.50%.² This means clients can keep more of what they earn.

More reliable income

Not only does VCHY’s benchmark potentially offer greater income than investment-grade bonds; it can be a potential alternative to actively managed below-investment-grade funds.

An analysis by Vanguard found that 63% of active high-yield mutual fund and ETF assets underperformed the Bloomberg U.S. Corporate High Yield Bond Index over a recent 10-year period⁵ ended April 2026. VCHY’s lower expense ratio gives the index ETF a 45-bps total-return head start compared to an active high-yield fund priced at the mutual fund and ETF category average 0.50%.²

Systematic indexing approach

Vanguard portfolio managers leverage state-of-the-art technology and human skill to mirror the VCHY benchmark’s risk and returns while seeking to minimize costs. This includes analyzing risk factors to set a benchmark sampling strategy, leveraging machine learning, and feeding data-driven insights into a proprietary optimization engine. The result is a handpicked portfolio built by expert high-yield managers using best-in-class technology.

VCHY is supported by two senior portfolio managers, a group of traders specializing in the high-yield market, and Vanguard’s tenured high-yield credit research group.

How to use it:

• Building block
  • As a standalone allocation.
  • Alongside a core bond allocation.
• Index satellite
  • As a satellite allocation to complement an active core fund.
• Diversifer of active managers
  • Added to a mix of actively managed funds to preserve flexibility for tactical or high-conviction active allocations.

1 The expense ratio information shown reflects estimated amounts for the current fiscal year as of May 2026.

2 The asset-weighted expense ratios were calculated using Morningstar data as of April 30, 2026.  For each mutual fund included, this reflects all mutual fund share classes. The expense of each mutual fund share class is generally higher than ETF expense ratios because mutual funds can charge 12b-1 distribution fees, administrative fees and sales charges that ETFs do not.

3 Vanguard and Bloomberg analysis. Data is from January 4, 2016, to December 31, 2025. High-yield total return is calculated using pricing data for the Bloomberg U.S. High Yield 250MM 2% Issuer Capped Index (Ticker: I40477US). US Agg Total Return is calculated using price data for the Bloomberg U.S. Aggregate Index (LBUSTRUU Index). VCHY’s benchmark is Bloomberg U.S. High Yield 250MM 2% Issuer Capped Index (Ticker: I40477US).

4  Vanguard calculations, using data from Bloomberg, J.P. Morgan, S&P, Dow Jones Indexes, MSCI, and Russell. Data from April 30, 2006, to April 30, 2026. Volatility calculated as annualized standard deviation of monthly returns. Abbreviated index names are as follows: S&P 500 is S&P 500 Index; Russell 2000 is Russell 2000 Index; U.S. High-yield Credit is The Bloomberg US Corporate High Yield Bond Index; HY CCC is The Bloomberg Caa US High Yield Index; emerging markets is The Bloomberg Emerging Markets Hard Currency Aggregate Index; HY BB/B is The Bloomberg Ba to B US High Yield Bond Index; US Agg is The Bloomberg US Aggregate Index; US IG Credit is The Bloomberg US Credit Index; US Treasury is The Bloomberg US Treasury Index; US MBS is The Bloomberg US Mortgage Backed Securities (MBS) Index; and Intl Agg is The Bloomberg Global Aggregate ex USD Index. The chosen indexes were selected to depict diversification. The S&P 500 reflects the broad stock market and the Russell 2000 reflects small cap, together offering a comparison point for high-yield returns. The other fixed income benchmarks represent sector factors (Treasury, investment-grade) as well as aggregate benchmarks, as reference points for how the risk profile of high-yield differs compared to other funds/benchmarks investors can include in a portfolio. All of this shows that high-yield offers something unique in terms of return and volatility profile.

5 Vanguard analysis of Morningstar data using all active Morningstar category High Yield Bond share classes, as of April 30, 2026. The Bloomberg U.S. Corporate High Yield Bond Index measures the USD-denominated, high-yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Bloomberg EM country definition, are excluded.

Notes

For more information about Vanguard funds and Vanguard ETFs, visit vanguard.com/fundprospectus to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

All investing is subject to risk, including possible loss of principal.

Diversification does not ensure a profit or protect against a loss.

Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

As with any investment, an investment in the fund could lose money over any time period. The fund’s share price and total return may fluctuate, potentially within a wide range. The principal risks of investing in the fund are summarized below. Each of the following risks could affect the fund’s performance:

• General Market Risk. The markets in which the fund invests can be affected by a variety of factors. These factors, which can be real or perceived, may include economic, market, political, and regulatory conditions and developments as well as local, regional, or global events such as wars, military conflicts, natural disasters, and public health issues. In addition, investor sentiment and expectations regarding these factors can also impact the markets. Different parts of the market, including different industries and sectors as well as different types of securities, may react differently to factors that affect the market. These factors can contribute to market uncertainty, market volatility, and fluctuations in the value of the fund’s investments, thereby resulting in potential losses to the fund over short or long periods.
• Investing in Bond Markets. The fund may be impacted by the general condition of the bond markets and by factors that affect bonds and bond issuers. For example, as a general rule, bond prices and interest rates move in opposite directions. When interest rates rise, bond prices tend to fall, and when interest rates fall, bond prices tend to go up. Bond income also is affected by changes in interest rates. Interest rates can rise or fall for a number of reasons, including, but not limited to, central bank monetary policy, inflationary or deflationary pressures, and changes in general market and economic conditions. Changing interest rates, including, but not limited to, rates that fall below zero, could have unpredictable effects on the overall market and may expose the bond markets in particular to heightened volatility and potential illiquidity. The degree to which the fund is impacted by certain bond market risks may vary based on factors disclosed in its principal investment strategies, such as the types of bonds in which it invests and the overall credit quality, average maturity, and/or average duration of its bond holdings.
• High-Yield Securities. Bonds rated below investment-grade, also referred to as high-yield securities, are considered speculative with respect to the issuer’s ability, or perceptions of the issuer’s ability, to make timely principal and interest payments. They are more volatile, less liquid, and involve greater risk of default than investment-grade securities. Investing in high-yield securities could result in a loss of income and/or principal for the fund.
• Interest Rate Risk. During periods of rising interest rates, bond prices overall may decline, which could result in a decline in the fund’s value. The prices of longer-term bonds are more sensitive to changes in interest rates than the prices of shorter-term bonds.
• Income Risk. During periods of falling interest rates, the fund’s income may decline. The income paid by shorter-term bonds is subject to a higher degree of fluctuation than the income paid by longer-term bonds.
• Credit Risk. Credit risk refers to the chance that an issuer will default (fail to meet its credit obligations) or fail to make payments in a timely manner, which could result in a loss to the fund. In addition, negative perceptions of an issuer’s ability to make payments can cause the price of a security to decline. While all debt securities are subject to credit risk to some extent, those with higher credit quality ratings generally pose less credit risk than those with lower credit quality ratings.
• Bond Liquidity Risk. If the fund is unable to sell a security at an advantageous time or price, its returns may be reduced. There may be limited trading in the secondary market for certain debt securities, which could make them more difficult to value or sell. For example, the market for certain 144A securities may be less active than the market for publicly traded securities. Investing in such securities may heighten this risk for the fund. In addition, liquidity in the corporate bond market may be impacted by overall market conditions or by a decline in the availability of credit.
• Call Risk. Certain bonds held by the fund may be callable. The issuer of a callable bond has the right to “call” (redeem) the bond before its maturity date. Calls on bonds held by the fund would result in the fund losing any price appreciation above the bond’s call price. In addition, because bond calls occur more frequently during periods of falling interest rates, the fund likely would be forced to reinvest the proceeds of any called bonds at a lower interest rate than that of the called bonds, resulting in a decline in the fund’s income and a potential loss in the value of the fund’s investments. Frequent bond calls and subsequent reinvestments of the proceeds also would increase the fund’s turnover rate.
• Extension Risk. During periods of rising interest rates, certain bonds held by the fund may be paid off substantially more slowly than originally anticipated. As a result, the value of the bonds may fall, resulting in a decline in the fund’s income and a potential loss in the value of the fund’s investments.
• Index Investing. The fund is subject to risks associated with index investing. Because the fund generally seeks to track the performance of the target index regardless of how the target index is performing, the fund’s performance may be lower than it would be if it were actively managed. Additionally, because the fund does not hold all of the securities included in the target index, it is subject to the risk that the representative sample of securities selected by the advisor will, in the aggregate, vary from the investment profile of the full target index. The performance of the fund’s investments, in the aggregate, may not match the investment performance of the target index. This risk, known as tracking error risk, may be heightened during times of increased market volatility or under other unusual market conditions. The fund also could be negatively impacted by changes to the target index made by the index provider or by errors made by the index provider. Any gains, losses, or costs associated with or resulting from an error made by the index provider will generally be borne by the fund and, as a result, the fund’s shareholders.
• Concentration Risk. Except as may be necessary to approximate the composition of its target index, the Vanguard U.S. High-Yield Corporate Bond Index ETF will not concentrate its investments in the securities of issuers whose principal business activities are in the same industry or group of industries. If the target index becomes concentrated and the Vanguard U.S. High-Yield Corporate Bond Index ETF needs to concentrate in the same industry or group of industries, its performance could be negatively impacted by the industry or industries in which it is concentrated.
• Investing in Foreign Markets. Foreign markets can perform differently from U.S. markets. World events could adversely affect the value and/or liquidity of securities of foreign companies or foreign issuers, potentially in ways that differ from impacts to U.S. companies or issuers. Further, global economies and financial markets are becoming increasingly interconnected, which increases the possibility that conditions in one country or region could adversely impact a different country or region. In addition, the rights and remedies associated with investments in a fund that invests in foreign securities may be different from a fund that invests in domestic securities. To the extent that the Fund invests a large portion of its assets in securities of issuers located primarily in one country or region, the Fund’s performance may be hurt disproportionately by the poor performance of its investments in such country or region.
• ETF Share Trading. The fund’s ETF shares are listed for trading on Cboe and individual investors may only buy and sell them on the secondary market at market prices. Although it is expected that the market price of an ETF share typically will approximate its net asset value (NAV), there may be times when the market price of an ETF share and its NAV differ significantly. Disruptions to creation and redemption transactions, the existence of significant market volatility, or potential lack of an active trading market for ETF shares (including through a trading halt), as well as other factors, may result in ETF shares trading significantly above (at a premium) or below (at a discount) the fund’s NAV or the intraday value of the fund’s holdings. Thus, you may pay more or less than NAV when you buy ETF shares on the secondary market, and you may receive more or less than NAV when you sell those shares.
• Authorized Participants. Only authorized participants may engage in creation or redemption transactions directly with the fund. The fund has a limited number of financial institutions that may act as authorized participants. The fund’s authorized participants are not obligated to engage in creation or redemption transactions. To the extent that the fund’s authorized participants are unable to or choose not to proceed with creation and/or redemption transactions with respect to the fund and no other authorized participants step forward to engage in creation or redemption transactions with the fund, the fund’s ETF shares may trade at a discount to NAV and possibly face trading halts and/or delisting.

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